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Role of CSR in Today’s World and does it Provide any Competitive Advantage to the Organization and Social Benefits to Society: Case of McDonald’s

Master's Thesis 2012 76 Pages

Business economics - Business Management, Corporate Governance

Excerpt

Contents

Chapter 1 - Introduction
1.1. Background
1.2. Problem Discussion
1.3. Research Questions
1.4. Aims and Objectives

Chapter 2 - Literature Review
2.1. Corporate Social Responsibility and its Importance in Today’s World
2.1.1. Extent of Following CSR behavior in various organizations
2.1.2. CSR is Helpful for Organizations in Global Market place
2.2. CSR and Competitive Advantages for the Organizations
2.2.1. Benefits of CSR for Organizations
2.2.2. CSR Impact on Stack holders’ Relation with their Organization
2.2.3. CSR Benefits for Organization to Build Relations with Society
2.3. CSR and Social Benefits for the Society
2.3.1. Social Benefits of CSR in Globalization Era

Chapter 3 - Methodology
3.1. Purpose of Research
3.2. Research Approach
3.3. Research Strategy
3.4. Sample Selection
3.5. Data Collection Method
3.6. Data Analysis

Chapter 4 – Data Analysis and Discussion
4.1. Introduction to McDonalds
4.2. Qualitative Data Analysis
4.3. Quantitative Data Analysis
4.4. Conclusion of the findings

Chapter 5 – Conclusion

References

Appendix

List of Figures

Figure 1 – Age of the survey participants

Figure 2 – Food Purchase of McDonald Per Week

Figure 3 – Consumers Awareness of McDonald’s CSR Initiatives

Figure 4 – Preferences of Consumers Among Various CSR Activities

Figure 5 – Awareness about CSR Initiatives by McDonalds

Figure 6 – Extent of Following CSR Responsibility McDonalds

Figure 7 – CSR Activities and Purchasing Decisions of Consumers

Figure 8 – Affect of Negative CSR Initiatives on Purchasing Behavior of the Consumers

Figure 9 – Social Causes of McDonalds

Figure 10 – Switching Preferences between McDonalds and other Food Chains

Figure 11 – McDonalds CSR Activities and Social Benefits

Figure 12 – Nutrition Information on Food Packaging of McDonalds

Figure 13 - Positive Effects of McDonalds CSR Activities on Consumer Welfare and Communities

Figure 12 – RMHC of McDonalds and UK Community

List of Tables

Table 1- Age of the Respondents

Figure 1 – Age of the survey participants

Table 2 How often you eat food from McDonald?

Figure 2 – Food Purchase of McDonald Per Week

Table 3 - Awareness of corporate social responsibility of organization

Figure 3 – Consumers Awareness of McDonald’s CSR Initiatives

Table 4 – What CSR Activities an Organizations should be Involved in?

Figure 4 – Preferences of Consumers Among Various CSR Activities

Table 5 – Awareness of McDonald’s CSR Initiative

Figure 5 – Awareness about CSR Initiatives by McDonalds

Table 6- To what extent does McDonald follow its CSR responsibility

Figure 6 – Extent of Following CSR Responsibility McDonalds

Table 7 – Effect of CSR on purchasing decisions

Figure 7 – CSR Activities and Purchasing Decisions of Consumers

Table 8 – Effect of Negative CSR Initiatives on Purchasing Behavior

Figure 8 – Affect of Negative CSR Initiatives on Purchasing Behavior of the Consumers

Table 9 – Feeling of Consumers about Social Causes

Figure 9 – Social Causes of McDonalds

Table 10 – Switching Preferences between McDonalds and Other Food Chains

Figure 10 – Switching Preferences between McDonalds and other Food Chains

Table 11 – CSR Initiatives byo McDonalds and Benefits to Society

Figure 11 – McDonalds CSR Activities and Social Benefits

Table 12 – Nutrition Information on McDonalds Food Packaging

Figure 12 – Nutrition Information on Food Packaging of McDonalds

Table 13 – Positive Effects of McDonalds CSR activities on Consumer Welfare and Communities

Figure 13 - Positive Effects of McDonalds CSR Activities on Consumer Welfare and Communities

Table 14 –McDonald RMHC Contributed to UK Community

Figure 14 – RMHC of McDonalds and UK Community

Chapter 1 - Introduction

The chapter 1 of the dissertation will highlight the research background that will lead towards discussion of the problem that is to understand the role of CSR in today’s world, resulting competitive advantages for the organization and social benefits for society. The chapter will introduce the CSR and its role in today’s world and advantages for organizations. The chapter will include overall purpose of study and specific research questions. The hypothesis of the research will be included at the end of the chapter.

1.1. Background

Business is not a separate part from the rest of the parts of society. The ways organizations behave affect a lot of people, not only the shareholders. Therefore, an organization should be responsible for the operations it does in a society. Organizations and businesses are under more scrutiny than ever before. Besides being a profitable organization, the responsibility of a business can be connected to fair treatment programs for employees, fundamental friendly methods for a sustainable environment and participation in the discussions regarding social ethical dilemmas etc.

The debate about the role of a business organization in the society is the expression of vast corporate responsibilities which is referred as corporate social Responsibility (CSR). There is no universal definition for the introduction of CSR; however, most of the firms and organizations have their personal interpretations of CSR. According to a definition by European Union states, CSR is the concept to explain the way companies integrate environmental and social concerns in their business activities and interaction with shareholders on a voluntary basis (Herbert, C. M. & Schantz, C. V. (2007, p. 4).

Much of the debate about CSR focus on case studies of individual firms, their best practices and moral and philosophical arguments intended for the encouragement of adoption of CSR codes by the organizations. The debate begins from rich countries of the globe and resonance in poor countries. Although CSR is often referred as the voluntary initiative by organization acting alone to become upstanding corporate citizen, however, a private business that adopts and implements codes of CSR is in the center of many other actors who involve in incentives, pressure and advocacy. Particularly, it is true for organizations in Caribbean and Latin America, where incentives and pressures start often from outside the economy in which that firm operates.

The key factors that play a role in the system of CSR include state, CSOs of local industry and business, firms, academic institutions, local NGOs and labor as well as the foreign actors. Moreover, foreign firms, local firms that are linked to foreign firms through inputs, contracts, sales and ownership, foreign governments, international NGOs, private foundations from more developed countries and multilateral organizations play an prominent role (Haslam, 2004).

The rational for CSR has been depicted in various ways. It is about building global economy that is sustainable and where labor, markets and communities. The core drivers for corporate social responsibility include:

- Enlightenment of Self Interest: Creation of cohesive society, synergy of ethics and sustainable global economy, where labour, markets and communities may function together in better manners
- Social Investment: Contribution to social capital and social infrastructure has been seen as the necessary part of conducting the business
- Transparency and Trust: There are low ratings of trust of business in public perception. There is an expectation that companies may be more accountable, more open and prepared for publicity reporting on their performance in environmental and social arenas
- Increased Expectations of Business by Public: Global companies are being expected to do more rather than only providing jobs and contributing to the economy through employment and taxes (ASOCIO, 2004).

Competitive advantage and financial gains from the firms are being emphasized by the investors from investments in CSR implications. Stakeholders are requiring companies to go ahead of the strategic philanthropy notion and international codes of conduct. Some states have demanded the large organizations to conduct their business in ways that ensure contributions to regional and national economic and social development.

Many civil society groups and NGOs have required that companies adhere to the high standards of environmental and human rights protection and provision of resources to local communities. Only a few corporations have responded successfully to such expectations of stockholders. However, there is a problem that in most of the corporations, there is misalignment in the functions and strategies of business and CSR that results in the minimal benefits from the allocation of scare resources to programs of CSR, which can be harmful for the reputation of the company.

The reason of these minimal benefits is that CSR programs yield only minimal benefits as the mangers are provided with a fixed budget and are encouraged for the allocation of funds to the wide range of charities. The contribution pie of the organization has to be cut into many pieces and spread the goodwill in a lot of beneficiaries. In addition, cash resources of the organization are allocated to projects that do not take advantage of the non financial assets of the company or thinking that how the social projects can support the objectives of the business. If the resources of the corporation are allocated in this manner, strengths that help a company for competitive advantage, in the business, are not leveraged in the manners to be beneficial for the company or society. The organizations, following this approach, may not reap the complete benefit of their initiatives of CSR (O’Brien, 2001).

Corporate social responsibility in organizations can bring social benefits for society. Governments and the public are aware of the importance of CSR and need for corporations to play their active role in CSR policies. Corporations have positive and profound influence on society by investing capital, providing jobs, doing business and purchasing goods. The most valuable part that a corporation plays in a society is the contribution towards a prosperous economy.

Porter and Kramer (2006) have argued that developing countries distort the incentives and rules for business, they penalize the productive corporations and such countries face low wages, poverty and selling off the natural resources. In fact, corporations understand how to use these resources in a better way, not only in developing economies but also poor communities in developed countries. No doubt, there are some businesses that seek for profits in the short run and shrink the environmental and social consequences of their activities. However, CSR does not mean only to make a contribution to local charities, providing relief to needy in the society or helping people in time of disaster. The basic point is to make the effort that share value in operations and social dimensions in the context of competition that may foster the social and economic development.

1.2. Problem Discussion

It has been a widely shared assumption among scholars of management and economics that businesses focus only on profit and provision of the public goods is the responsibility of the state system. However, under the conditions of today’s world economy the view to conceive the businesses as economic actors and state agencies governments as political actors does not hold. In addition, strict labor division under public and private business is hard to hold any more. Therefore, most of the organizations have started assuming their social responsibilities which are beyond the legal requirements (Scherer & Palazzo, 2011, p 900). Being responsible as a corporation is not a new concept any more.

Modern societies around the world face diverse social problems. Societies now expect the organizations to help finding a solution for these problems, such as global warming is the problem that affects all and modern corporations will not be able to continue assuming that problem will go away. Therefore, they have to play a very prominent role by adopting CSR policies.

Business organizations have been regarded as the constructive part of communities in which they conduct business. Although businesses have been playing a very important role in creating wealth, employment, goods and services, however, there is still pressure on them to play their role in issues relating to stakeholder, employees, government and environment etc has been creasing more recently. As the response, the organizations around the world are being forced to wake up for commitment towards corporate social responsibility. Although, there is a need for more effort, time and resources, the businesses have realized that CSR can be helpful for their distinguish position by adopting CSR behavior.

Corporate social responsibility is not only essential for the enhancement of brand image, but also helps to move towards sales improvement and customer loyalty, thus creating competitive advantage for an organization. Financial performance of the organizations can be improved by investing on CSR. In addition, there is the possibility of attraction for more investment that may result in immense economic outcomes. Therefore, the word CSR has occupied crucial place in the strategies and plans of businesses in today’s world (Sharma, Sharma, & Devi, 2009, p. 206).

The organizations of the modern century have become part of a global business community which have affected and are being affected by events, pressures and social changes from around the globe. Whether the number of employees in an organization is in hundreds or thousands, its linkages to employees, suppliers, customers and communities are likely to be more beneficial for a successful business. Therefore, the relationship between governments, society and business is extremely important to understand as a manager as well as a citizen. It is crucial for organizations to understand how they can blend social and economic purposes with less conflict and maximum positive outcomes for all.

Such relationships become highly complex when the whole world moves towards the system where nations can play rules of capitalism, but it is now a level game. Therefore, there is a need for a system that may allow for social transition and a new social order as the result. It is also true that the process of liberalization of trade in the time of economic globalization has introduced various challenges upon less developed countries. The organization that want to continue existing state need to be coped with all the standards that are required and suggested by corporate bodies of donor agencies and developed countries, as many research findings have revealed that CSR behavior adds value to operations of a business.

In addition, there are some obligations on the organizations as they sometimes create problems in the name of revenue generation process. These problems need to be properly addressed, therefore, employees, corporate executives, consumers, shareholders and the public is more interested about business operations and expect businesses to be engaged in serious social issues such as quality living of consumer, reasonable price, fair wages, safety of employees, proper fund management and fair advertisement. Above all, there is a need for businesses to be aware of the possible contribution for sustainable development by properly managing their operations in a way that may enhance economic growth, ensure environmental protection, increase competitiveness and promote social rights. Thus, CSR is the idea of integration of social and environmental concerns by the companies, in their business activities (Mamun &Ahmad, 2009, p. 632).

There are six basic initiatives that show social responsibility of an organization. These initiatives include because related marketing, cause promotion, corporate social marketing, community volunteering, corporate philanthropy and business practices that are socially responsible. Organizations can have a competitive advantage CSR policy implementation. Donors can abandon their focus on relations benefit with public for adopting an approach to create economic value and social impact. It is possible to achieve by shifting the focus on improvement of competitive context that would not only bring alignment to economic and social goals but also improve business prospects in the long run and enable organizations to leverage their relationships and capabilities.

There are four interrelated elements for competitive advantage of a company: demand conditions, rivalry, context for strategy and supporting and related industries. This approach needs rigorous transition for implementation and should include an examination of main geographical locations for comparative advantage. In addition there is a need for reviewing the current philanthropic policies of value creation, analysis of collaboration opportunities and mechanism for the evaluation and tracking of results (Porter & Kramer, 2003).

McDonald’s is among the leading global restaurant chains. The brand started in 1940 in San Bernardino, California, by two brothers, Dick and Mac McDonald. Now, it has 30,000 chains in more than 100 countries. In 2006, the company announced that it will provide nutritional information on its products’ packaging, for customers’ benefits. For McDonald’s, CSR is about following values every day, taking action, maintaining communication lines with stakeholder and customers and achieving results. McDonald’s is determined for continuous improvement of its environmental and social responsibilities. The company works hard with its suppliers and franchisers of independent restaurants, in order to strive towards better and sustainable future for the communities in which it operates as well as for the company. McDonald’s has been committed to doing the right thing from its beginning, and today its values continue to be the base for what the company is, what it does and how it operates.

The company conducts business to high standards of honesty, fairness and integrity and accountable and responsible for its actions. The company operates the business ethically, give back to communities where it operates, grows business profitably and strive for improvement continuously. The company has long recognized the values of limiting environmental footprints. The mangers of company argue that better environmental policy is not only beneficial for the society where they operate, but also contributes towards its long term financial success. The company has initiated its energy conservation measures thirty years ago and formally established its global environmental commitment in 1990 and forged the alliance with Environmental Defense Fund. It has eliminated 300 million pounds packaging material, during 1990s, by reducing and redesigning materials. Since then, it has been seeking the ways for the improvement of environmental performance. The company has gained byproducts of innovation and efficiency by thinking green as the company uses less and spends less by producing less waste, conserving energy and minimizing resources used by suppliers (www.aboutmcdonalds.com).

1.3. Research Questions

The core research questions of the present study are as follows:

- What is the importance of CRS in today’s world and does it give any competitive advantage to McDonalds and/or social benefits to the society?
- How can corporate social responsibility help McDonalds to compete successfully in the global marketplace, and how is it related to the concept of globalization?
- What implications, we can find, by exploring about CSR experience of McDonalds?

1.4. Aims and Objectives

The concept of corporate social responsibility is very valuable for organizations to understand and implement as it helps them to understand their duties, liabilities and responsibilities to improve their working conditions, infrastructure and safe environments for their customers and society as a whole.

Every research is based on some objectives to meet. Current study has some objectives that are discussed below:

- To what extent, does McDonald follow corporate social responsibility? The study aims to explore and discuss CSR efforts by McDonalds. CSR initiatives by McDonalds will be discussed in the study
- Does this give McDonald any competitive advantage? McDonald is among the top fast food business that is conducting business worldwide. Competitive advantage gives a business power to stay in business for long, therefore, the study will find out possible competition advantages for McDonalds as the result of adopting CSR policies
- Does this help McDonalds to compete in the global marketplace? McDonald has been in fast food business longer as compared to their competitors. The study will explore whether CSR policies are helpful to compete at the international marketplace
- Is McDonald’s corporate social responsibility giving any benefit to the society? CSR is where an organization invests into infrastructure and communities to increase its sales and to have an excellent reputation. The study will find out the possible positive outcomes of such investments for the society.

Chapter 2 - Literature Review

The overview of the research relating to research questions is presented in literature chapter. First studies relating to CSR and its importance in the world will be discussed. Studies relating to competitive advantage for organizations will be discussed that implement the CSR. In addition, studies relating to social benefits of CSR for the society will be discussed.

2.1. Corporate Social Responsibility and its Importance in Today’s World

Corporate social responsibility has become the main focus of interest not only by the organizations’ managers but also for the practitioners of development, both within the bilateral and multilateral agents and development NGOs. Official development agencies particularly have a positive view for CSR impacts. The current debate of CSR dates back to 990s. It is the latest manifestation of the debate over relationship between society and business. The consideration from large corporations in US in late 19th century led to movements of antitrust and utilities regulation. Demand for CSR in US companies sought to demonstrate that corporations could be better without intensive push from unions and governments. At the international level, the draft charter of International Trade Organization was signed that included measures to be addressed including employment standards, international investment and business practices (Jenkins, 2005, p. 525).

2.1.1. Extent of Following CSR behavior in various organizations

According to a definition by European Union states, CSR is the concept to explain the way companies integrate environmental and social concerns in their business activities and interaction with shareholders on a voluntary basis (Herbert, C. M. & Schantz, C. V. (2007, p. 4). Scholars of economics and management share the assumption widely that focus of the business firms is only profit and provision of public goods is the task of the state system. The businesses are being conceived as economic actors and state agencies and governments to be only political actors. Scherer & Palazzo (2011) have suggested that under the globalization conditions, the strict labor division between nation state governance and private business does not hold any longer.

Most of the businesses have initiated to assume that political and social responsibilities which are beyond the legal requirements and can fill the vacuum with regulations in global governance. They have found that there is growing number of publications that proposed the concept of CSR and considered the implications of new theorizing about governance, business firm and democracy.

There is a need for development options to meet the key challenge for the CSR behavior by the organizations. According to a study by World Bank, there are some considerations as follows for CSR behavior:

- Organizational needs of the buyer, and whether such needs make the adoption of CSR more or less likely,
- The risk that CSR option may lower the standards,
- Cost of time and money that is required for the implementation of the option, and concern that whether the stakeholder will get ready for required investment,
- Implementation feasibility of CSR, particularly required roles of institutional actors and whether they are willing to have such role and
- Implications for role of public sector, including donors from industrial countries and governments of developing countries (The World Bank Group, 2003).

It is important to know that CSR policies are not only the result of good will of the leaders of a business, but some stakeholder raise the issues relating interests of governments, investors, employees and others. De, et al (2008) have described such influencing groups as the activist groups and argued that such groups start their influencing campaign by organizing and collecting information about the concerned issues and disseminate the information to their target audience. They inform the management of the target firm about their particular concerns and desired outcomes. If the responses of a firm are seem to be inadequate, the activist groups are likely to continue the campaign, however, with some more valid tactics.

The authors have introduced four types of tactics that are being used by the activist group to pressurize the firms to not to rely on legal action or state for issue resolution: political consumerism, shareholder activism, alternative business systems and social alliance. The authors have found that the impact of particular tactics on activist and firm relationship cannot be identified clearly. Firms have different responses towards various tactics. Most of the organizations have installed issue public affairs and management departments and tried to keep track of issues to respond any incidents. Apart from information provision, about corporate values, missions, ambitions and policies, such departments are used to reach out to groups of activists and many other stakeholders through stakeholder management and business roundabouts.

Frederick (2006) argues that nowadays, consumers are more aware of everything going around as compare to previously. They completely understand what needs to be done and what their basic requirements are. The local customers have a common understanding of the corporate performance and activities, that are the reasons why they demand to get the highest level of corporate social responsibility from the corporate sector, so that it could add value to the general welfare and environment, without causing harm to anyone anywhere in the world.

Usually, the basic things require by the consumers consists of product quality, product selection, variety of range, location, product price, atmosphere provided to the customers, customer service, social and environmental responsibility provided by the company. This shows that consumers are not always attracted towards the location of the stores, but their preferences have been changing with the passage of time, as they know how to react towards better quality, product price, atmosphere, product location, product variety, customer service, environmental and social impacts, as well. This means that they are attracted towards the product that is provided by the company after taking care of all the characteristics supported by the educational and awareness level of the consumers. Customers normally react towards the highest level of corporate social responsibility provided.

Most of the workers are employees of companies and are agree to do what the owners of the companies ask them to do. The companies, in turn, pay them a salary or wage. This relationship or contract is the example of principle-agent relationship that is described by Anon (2009). According to the scholar, the agreement of agent principle is common contract for employment in capitalist economies. According to research, the agent principal relationship is the base for an economic model of business that has only purpose of profit maximization.

According to the advocates CSR, the profit is not the core of well being and continuous existence of a business; however, it should not define the purpose of a business. The advocates of CSR believe in agreement of principle-agent relationship and believe that it has a trust that includes expectations relating to loyalty, honesty, disclosure of relevant facts and obedience. It is the duty of the workers to obey the rules of firm. However, the advocates of CSR believe that fiduciary duty expands beyond only the shareholder to other stakeholder, such as suppliers, employees, community and customers. The study has proposed a lesson plan that allows readers to debate if a business can serve the interests of society by adopting policies that may promote environment, social justice and many other causes.

2.1.2. CSR is Helpful for Organizations in Global Market place

While discussing the importance of CSR, it is also worthwhile to explore that which areas of the globe are showing more responsibility towards CSR. In his study, Green (2008) has highlighted that the 2st century CSR concept has become the catchphrase. However, the term is understood by a few people. It is being described as the integration of various business values and operations, where interests of customers, investors, community, environment and employees are reflected in policies of corporations and its actions. The researcher has informed that CSR is slow to be implemented in Caribbean. According to a study by Inter-American Development Bank (IDB), cited in Green (2008) the CSR activity is weak in Caribbean and Latin America where a few companies are adopting the formal agenda of CSR, which ensures healthy conditions of workplace and livable communities. In addition, CSR is a growing movement that is in its infancy and is being viewed as corporate philanthropy. There is an increase in interest in CSR; however, stilt there is the need to do much in order to disseminate the economic and social benefits of CSR policies. The study has revealed that responsible businesses can contribute to a significant level to make a difference in economic and social development in the region.

In the context of the above discussion, it can be asserted that main social responsibility of organizations is in current as well as in coming decades. It is greater responsibility to create the capital that alone may finance tomorrow’s requirements. The only and oldest valid definition for economic growth can be described as a shift towards jobs that require more capital investment for each worker. The capital formation demand will be as big as hindered years before when modern industries of today emerged. There will also be equal need for an excessive amount today for R&D required when world economy and technology are changing rapidly (Drucker, 1984).

With the advancement of globalization, the multinational corporations have track recorded their CSR to the best in developing countries. Jamali (2010) has attempted to bring out insights from international business and business society political behavior to identify the contingencies and dimensions that may be used for the analysis of CSR of multinational corporations in developing economies and extent of localization or standardization of the strategies. The study has made use of the new framework for interpretive research methodology in order to examine the CSR orientation of some multinational corporation subsidiaries in Lebanon. The author has concluded that the CSR pattern is being diffused in the developing countries; however, it is being diluted in the way in subsidiary endowments and their characteristics.

The global perspective of CSR has been studied by Muthuri & Gilbert (2011). They admitted that there is no doubt that CSR has become a global concept and important feature of global business, with its practices are localized and are different across the countries. Despite the growing research focus on corporate social responsibility in developing countries, there is little research in African countries, about institutionalization of CSR. The research has examined the form and focus of CSR practice of organizations in Kenya. It was obvious from the findings of the research that the orientation and nature of CSR is different across the companies in Kenya and those which have headquarters abroad or have international operations. Firm related drivers, such as public performance and relation, as well as, the pressures from global institutions explain the form and focus of corporate social responsibility in Kenya.

The study has concluded that CSR institutionalization in Kenya requires attention to be paid to stifling conditions for CSR uptake, for example, lack of government’ capacity, its regulations and commitment for the enforcement of regulations. The author has proposed encouragement of establishment of CSR institutions and an efficient civil society that may advance regulations.

2.2. CSR and Competitive Advantages for the Organizations

Concept of corporate social responsibility seems to be having obligations for an organization and that it has just responsibilities relating the society, however, organization can have a competitive advantage with the implementation of CSR. Generation of wealth in such a manner that is environmentally and socially responsible, must become a common goal for teh international and domestic business community (BRITISH CONCIL, 2004).

Ahmad & Seet (2009) have discussed the development of competitive advantage through ethical practices of corporate social responsibility practices. They have chosen Australian and Malaysian Small and Medium Entrepreneur (SME) owners. In order to observe the development of competitive advantage, they based their research on interviews from twenty entrepreneurs of Malaysia and Australia who operated in service and manufacturing sectors.

The authors have revealed three important ethical behaviors, by analyzing the content data. First, the SMEs have a concern for ethical practices, second thing is taking responsibility of being accountable and third maintain the integrity and honesty. The participants of the study responded four most important socially responsible behaviors that include responsibility towards its staff, social responsibility, responsibility towards entrepreneurs and responsibility towards its customers. The researchers concluded that both Malaysian and Australian business owners exercised and considered socially responsible and ethical practices in their business. They also proposed a framework for an empirical test of the links of socially responsible and ethical practices with a competitive advantage of a firm.

There is an increasing concern and debate about the importance of corporate social responsibility. Some of the scholars argue that CSR trend is self serving to oddest concern over increasing profit of an organization or over corporate scandals. However, many other argue that short term financial performance is not the core factor for organizations to be successful in the long run. According to Broke (2005), there are various definitions for CSR, however; they led to confusion and make the issue undefined.

Best practice of CSR is, the way of running the whole business in such a way that allow the organization to the total impact on environment and society with the basic objective of generating value for shareholders. It means CSR does not come on the expense of shareholders, rather enhace the value. The author has further argued that regulatory, economic climate, activism and societal discernment suggest a good business practice to be one that includes corporate social responsibility as part of risk management by a business and, therefore, is the board responsibility. Development of organizational culture for the encouragement of cooperation, increase in trust and reduction in the risk of unethical behavior, is the core business responsibility and can be good for an organization, in the long run. Strategies of strong corporate responsibility are only the proxy for better management.

2.2.1. Benefits of CSR for Organizations

Today, most of the organizations realize the positive outcomes of practicing CSR. The core concept of CSR is to focus that how organizations can be beneficial for the society. CSR is helpful for the provision of solutions for the social problems, maintenance of sustainable environment and building healthier economies. However, CSR is being proved beneficial for companies, as well. The most important corporate benefits include improvement and maintenance of brand image or reputation, employee retention and recruitment as well as customer loyalty.

According to Brooks (2008) the whole nature of CSR has changed over the last ten years. Earlier CSR was largely directed to deal with concern that, fast economic development inevitably and invariable had the result of more victims than beneficiaries. It was very difficult to convince the capitalists that it could bring positive outcomes; however, most of the capitalists believed that good outcomes are possible only from profit. The core principle of that time was only based on what organizations were doing for the stockholder’s benefits. However, the emphasis has changed and stakeholders have become more engaged with CSR process, the organizations are being expected to do more. Now they are under pressure to actively pursue the policies which can bring direct benefits for others, not only for stakeholder.

Lydenberg (2005) argues that being socially responsible is no longer a discretionary part for any organization. It has become a mandatory obligation for any business who wants to be successful among its competitors in the global competitive marketplace. Now, corporations adopt corporate social responsibility as an essential element of their business despite the consequences of whether to serve internal or external, and primary or secondary stakeholder. In today's world, communities and societies expect every single business; regardless of its operations size to be socially responsible. That is why companies act as socially responsible in whatever way possible, so that they could create a positive image in front of the world and attract new satisfied customers, while retaining the old customer base.

The organizations that will survive and prosper in the future are those which are focusing on some other issue, rather on the profitability of the business. According to Blyth (2005, p. 30) top and highly qualified candidates of employment prefer to work with the organizations that have social responsibility, and consumers have increased awareness of social issues, such as CSR. It does not mean that companies should stop their business; rather it simply means that they should recognize their responsibility. The challenge for the businesses is to have balance in their responsibilities to society and to stakeholder. There is a need for reconciliation among society and stakeholder. In fact, the growth rate of investment in social responsibility suggests that investors have realized that, good responsible businesses are likely to be successful businesses.

2.2.2. CSR Impact on Stack holders’ Relation with their Organization

Among the benefits of CSR behavior, the development of employees and their moral is prominent. According to Ashworth (2006, p. 44), CSR behavior can make an organization an employer with choice. The author has emphasized the need for making the CSR an HR concern in order to gain much from it. The author has argued that nowadays, the desires to be fulfilled at work and to contribute are the stronger desires than ever before. Therefore, employees have an opportunity to benefit their communities in some tangible way. The author has realized that the benefits of CSR behavior are not limited to altruistic nature; they also bring prominent benefits for an organization and its bottom line. Adoption of CSR policies can bring benefits for societies and communities as well as for employer brand and workforce of an organization.

It is important for businesses to explore the potential benefits of CSR. Consumers, the main target and end users of the products and services are the core for success of a business; therefore, it is worth knowing the effect of CSR policies of an organization on the buying behavior of consumers. According to Mohr, Webb & Harris (2001, p. 45) the public has less confidence in business organizations than many other institutions such as police, military, newspapers and public schools. Therefore, corporations are under intense pressure to donate money for charities, help in solving social problems and protecting the environment in their communities, in more responsible way.

The author has argued that business leaders and academics have been debating on the issue of social responsibility of a business; still there is little research on the expectations of the general public. The author has discussed the role of CSR in purchasing behavior of consumers. The author found that there is a contradiction between the general assumptions and finding of the study. The study has found that buying behavior is not only effected by immediate self interest. However, there is a need for future research on consumer awareness of responsible behaviour of organizations.

The author has suggested research propositions, based on the finding of research that higher levels of knowledge in consumers about social responsibility of organizations is positively related to social responsibility of consumer behavior. The more consumers see their buying power influence the behavior of a company, the likely they are to adopt social responsible consumption behavior. In addition, the study has found that consumers with the viewpoint of quality of life as economic benefits will be less likely to adopt socially responsible consumption behavior. The author has proposed implications for the managers of organization with CSR policies that they should aware of purchasing decisions of consumers as the viable, sustainable and identifiable segments of market exist to consider that social responsibility level of a company. Therefore, manufacturers and retailers have the opportunity of appealing the group while meeting the objectives of consumers, by making a contribution to society. Managers can develop communications to provide details of their companies that how they help address the particular social issues.

In the era of globalization, the competition among businesses has increased to higher levels. There is an obvious gap between the developed and developing countries regarding CSR. In order to understand the impact of CSR on competitiveness of SMEs and NMEs in globalization, Gugler & Shi (2009) have first reviewed the traditional wisdom about the CSR developed in north and its role it can play in competitiveness of corporations, and compare the resulting competitive advantage through the supply chain. The authors have pointed out among different factors, which could explain the negative effect of corporate social responsibility in competitive advantage is the final thing where poor countries are defensive and reluctant towards CSR of western style.

The study has pointed out that poor countries are changing the approaches of making corporate social responsible work in favor of their position in global trade, such as policies adopted by China who is becoming CSR standards setter. The study has proposed two policy proposals with the aim to bridge the gap, that is to improve standard setting participation by adopting CSR and second is to search for solutions in the legal framework in international investments. Such a framework will define corporation responsibilities in relation to corporate social responsibility in an explicit way.The confliction is discussed in research by Rabet (2009) in his research, and it was argued that human rights regime is subjected to global economic regime. However, there is severe flaw in ideology belief in free trade, industrialization and economic growth.

Most prominent international financial institutes have advocated, and shaped such ideology, and have structured an international economic system that provide protection to particular corporate and national interests. The researcher has argued that it is delusional to promote and respect human rights in poor countries. Purpose of corporations is the generation of wealth for their shareholders and management to increase profit. A fair remuneration to the workers would undermine or prevent the realization of goals.

The study has concluded that CSR movement that emanate from corporations cannot offer an approach that is satisfying to protect, and promote human rights, which has no threat for profit motive of corporations. Achievement of global human security needs a paradigm change and challenge of health creation primacy through economic surplus realization over human rights protection and environment respect. Therefore, the current global economic regime and human rights regimes are incompatible.

The concept of CSR needs to be applied to businesses, and it suggests that businesses should not have responsibility of only stockholders, but must make decisions balance the other groups which are affected by the corporation actions. The ideas were proposed by Hamilton (1980), and he defined the other groups as administrators, managers, general public and employees. The relationship among characteristics of employees, functional position, industrial setting, employees’ response expectations and actual responses to demand by society has been investigated with the help of surveying individuals in different settings. A questionnaire of 48 items was formed and 35 items measured the various aspects of CSR that were separated, and retained into two different categories that reflect external or internal issues related to the organization. The study has found that organizations failed to meet the expectations of employees regarding social responsibilities.

2.2.3. CSR Benefits for Organization to Build Relations with Society

Among the advantages of CSR behavior of businesses, the relationship with the community has much importance because the businesses that are successful to gain positive popularity among communities have increased chances for success of business. Besser (1998) has discussed the same relationship and has revealed that most of the business operators in Iowa town have socially responsible behavior. Most of them report that give personal leadership to local community a more that fifth among them are public officers. Such participation is high given the business of low level the social responsibility that is suggested by the research studies. However, the author has argued that it is possible that the present level of support, commitment and leadership that is reported by operators of business is low as compared to levels of pre-globalization.

There is also possibility of business process in a small town to have more social responsibility than that in the larger community. The author has suggested an important implication that it is possible to ascertain the impact of variations in economic structure of the economy on businesses social responsibility. The important goal of the research was the elaboration of the outcomes of community collective actions on business social responsibility. The results of the study indicated that operators of business who feel that the communities have a high level of collaboration in action are more likely to provide leadership, to show commitment and give support as compared to businesses that have low levels of collaboration in their communities. The research has demonstrated that the relationship between resident business and small communities is complex and reciprocal. The study supports the connection that the communities are not only receivers of inaction or action from a firm, and it is worthwhile to examine community as independent variable in research related to social responsibility.

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Details

Pages
76
Year
2012
ISBN (eBook)
9783656395782
ISBN (Book)
9783656396215
File size
1.6 MB
Language
English
Catalog Number
v211701
Institution / College
University of Canberra
Grade
B
Tags
role today’s world provide competitive advantage organization social benefits society case mcdonald’s

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Title: Role of CSR in Today’s World and does it Provide any Competitive Advantage to the Organization and Social Benefits to Society: Case of McDonald’s